the total recognized debt to approve
and adopt a reorganization plan.
Colombia, on the other hand, has a more
31 of Ley No. 1116). Like Argentina,
Colombia categorizes different kinds of
Under the voting rules in Colombia,
a reorganization plan can only be
approved if voted affirmatively by at least
three categories of creditors, where the
percent) of the recognized debt for each
category. However, if the vote of 75
percent of the total aggregate recognized
debt of the insolvent entity is secured,
then there is no need to obtain the
favorable vote of at least three categories.
The discussion on creditors’ rights
concentrates on the power to veto
reorganization plans, as this is the most
important example of the influence
that creditors can assert on the fate
and continuation of operations of
an insolvent entity. A favorable vote
for the reorganization plan means,
in effect, the termination of the
reorganization proceedings, whereas a
continued negative vote results in the
transition of the insolvent entity from
reorganization to bankruptcy, with the
consequential liquidation of the assets
of the insolvent entity to distribute
secured, secured, and non-secured).
The rights to act collectively and the
voting requirements for the approval
of reorganization plans result in the
protection of all creditors. By working
collectively, creditors can ensure
that reorganization plans are crafted
in the best interest of the creditors
holding the majority of the debt
recognized by the insolvent entity.
Furthermore, the right to influence
the continuation of the operations of
the insolvent entity ensures that the
administration of the insolvent entity
is transformed to gain more stability,
not only during the reorganization
process, but also after the reorganization
plan is approved. These economic
benefits were the drivers behind the
decision of countries in Latin America
to improve their insolvency laws, as
can be identified in each declaration
Mario Jorge Yáñez Vega is a partner with Barrera
Siqueiros y Torres Landa, S.C., in San Pedro
Garza Garcia, Nuevo León, Mexico. His practice
includes M&A, project financing, foreign trade,
environmental and natural resources, entertainment,
and immigration. He has a law degree from
Universidad Nacional Autónoma de México and
a master’s degree from Columbia University in
New York. He also holds a postgraduate degree in
commercial law from the Esculea Libre de Derecho.
in support of the bills presented to
each Congress that later became law.
Other Common Concepts
In addition to the rights of creditors to
accept or reject a reorganization plan
and therefore decide the fate of the
continuation of an insolvent entity,
reorganization and bankruptcy laws in
the analyzed Latin American countries
also have the following in common:
reorganization) and bankruptcy
stritctu sensu. Conciliation tends
to preserve the company, and
bankruptcy seeks its dissolution
and liquidation. Conciliation
brings together the different parties
involved in the proceedings to
reach an agreement that ensures
the continuation of the insolvent
entity while trying to retain, to
the highest degree possible,
creditors’ rights of collection.
of foreign creditors at the same level
as domestic creditors and provide for
rules of service of process to ensure
the participation of foreign creditors.
for the creation of entities formed
by specialists as an auxiliary body
of the courts, which are tasked
with appointing ancillary figures in
visitors, conciliators, receivers, etc.).
observed and carried out with all
of their formalities before there
is a transition to bankruptcy
of the insolvent entity.
limited by time deadlines to
ensure that the proceedings have
a long-stop ending and are not
unduly delayed by debtors.
and therefore, federal courts
will be competent to entertain
commercial bankruptcy cases.
Mexico, for example, does not
and state courts), as it once did.
The modernization of bankruptcy laws
has been treated as a priority throughout
Latin America. The changes are seen as a
“must” to foster investment by the private
sector, both domestic and foreign.
Chile is the best example of this
transformation. According to a
competitiveness survey published as
part of “Doing Business 2012,” Chile
ranked 110 of 183 countries surveyed
in insolvency resolution. For a leading
economy in the emerging markets, that
low ranking was just not acceptable, and
Chile undertook updating its statutes.
Mexico experienced a similar situation
up to the end of the 20th century, and
the result was the publication of the Ley
de Concursos Mercantiles in 2000.
Countries in Latin America have
concluded that their “fame” regarding
uncertainty of insolvency proceedings
was no longer affordable. J